The USDCAD exchange rate has economic data that could influence this week’s recent trend.
USDCAD – Daily Chart
If Monday’s Canadian dollar strength continues, the USD vs CAD rate will have support below 1.3615.
On Tuesday evening, data will be released with the Canadian inflation rate at 8:30 pm HKT. The market is expecting a dip to the 2.6% level versus 2.7% last month. That will be followed two hours later by US consumer confidence. Traders will also see US GDP growth figures on Wednesday and PCE inflation figures on Thursday.
Weaker treasury yields have been influencing the price of the US dollar on Monday. Fed officials have signalled that there will be only one rate cut this year, but investors are looking for data or events to speed up that descent.
Bank of Canada Governor Tiff Macklem said on Monday that there is enough slack in the Canadian labour market to see growth and create more jobs even as inflation declines.
The central bank joined the ECB this month by cutting its policy rate for the first time in more than four years and said more cuts were likely if inflation continued to show it was on a firm path back to the 2% target.
“With some slack in the economy, there is room for the Canadian economy to grow and add more jobs even as inflation continues to move closer to the target,” Macklem said.
He added that officials do not think a significant rise in the jobless rate was needed to hit the 2% inflation target.
“It has always been a narrow path and we have yet to fully stick the landing,” he said.
“Job search difficulty suggests the government has some room to slow the growth of non-permanent residents without tightening the labor market too much and causing significant labor shortages”.
Fed Chair Jerome Powell welcomed an inflation drop in May but said policymakers were still seeking consistent signs that the economy was cooling.
“We see today’s report as progress and building confidence, but we don’t see ourselves as having the confidence that would warrant beginning to loosen policy at this time,” he told reporters.
